Need $1 trillion every year to finance sustainable development of poorest countries: Jeffrey Sachs

New Delhi: The world should aim to have at least an incremental $1 trillion every year to finance sustainable development for the world’s poorest and most vulnerable countries, leading economist and director, Center for Sustainable Development, Columbia University, Jeffrey D Sachs said.

Sachs mooted a massive increase in multilateral development bank financing and routine rollover of amortisations for over 20 years for the G20 Leaders’ Summit in September.

Strengthening multilateral development banks is one of the key issues being pressed by India during its G20 presidency.

The G20 has set up a nine-member expert group, co-chaired by former US treasury secretary Larry Summers and the chairman of India’s 15th Finance Commission NK Singh, to strengthen multilateral development banks. The idea is to identify ways to improve the ability of such institutions to fund a wide range of sustainable development goals and global challenges, including climate change and health issues.

Sachs, who gave a presentation to G20 Sherpas on financing green development on Thursday, said that roughly 1% of world GDP and 3% of world savings should flow towards this. He pointed out that IMF and World Bank debt sustainability framework was deeply flawed with debt to GDP thresholds that were far too low, adding the reason for this was the conflation of two different kinds of risks – liquidity and solvency risks.